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GM Bond Holders Decline Exchange Offers

GM’s exchange offers for $27.2 billion of its unsecured public notes and the related consent solicitations that were commenced on 27 April 2009 (earlier post) expired at 11:59 p.m. EDT on 26 May 2009. The principal amount of notes tendered was “substantially less” than the amount required by GM to satisfy the debt reduction requirement under its loan agreements with the US Department of the Treasury, to meet the debt reduction objectives under its viability plan, or to meet the minimum tender condition of the exchange offers as required by the US Treasury, according to a short statement issued by the company.

Since those conditions, as well as certain other conditions, have not been satisfied, the exchange offers will not be consummated. No further tenders of notes will be accepted and any notes previously tendered pursuant to the exchange offers will be promptly returned to the tendering holders.

Due to the foregoing, GM has also cancelled the meetings of noteholders with respect to each series of non-US dollar-denominated notes which were scheduled to take place on 27 May 2009 in relation to certain amendments proposed in connection with the exchange offers.

The GM Board of Directors is meeting to discuss GM’s next steps in light of the failure of the exchange offers initiative. The inability to meet the Treasury requirements or the objectives of the viability plan makes a bankruptcy filing more likely.



"unsecured public notes..."

June 1st GM is due to pay bond holders $1 billion in interest on debt. They told the bond holders that the interest will not be paid, because they do not have the money and will be filling for bankruptcy.


I doubt they were planning to pay anyway. For the bond holders its clearly a case where bankruptcy is best.


Since it is becoming apparent that throwing Rick Wagoner out has not worked, rumors are circulating that Chinese Prime Minister Wen Jiabao may not ask Barak Obama to step down.

The stabilizing presence of Joe Biden and Nancy Pelosi should not be underestimated in this context.

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